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Be bold, free transatlantic trade

The American and European business communities explain why they believe a transatlantic trade deal is necessary and feasible.

European Voice

6/13/13, 8:00 AM CET

Updated 5/21/14, 3:20 PM CET

The European Union has a unique opportunity to reignite economic growth by launching negotiations on a bold trade agreement with the United States, the Transatlantic Trade and Investment Partnership (TTIP). Done properly, TTIP would give European firms – especially smaller companies – much greater access to a huge market, spurring demand without burdening budgets or taxpayers’ wallets. The stars are aligned today; the EU must be ready to act when US President Barack Obama meets the president of the European Commission, José Manuel Barroso, and the president of the European Council, Herman Van Rompuy, at the G8 summit next week. If not, momentum, and this opportunity, may be lost.

Nothing is more important to our associations than to see the European economy moving again. As representatives of virtually every company in every EU member state, we have seen the impact of five years of little or no growth on our families, our friends, our firms. We have a moral imperative to generate jobs again, especially for Europe’s youth. We have no time to waste.

The United States is the EU’s largest market. Our trade and investment ties are strong – Europe exports €435 billion of goods and services each year to the 300 million consumers there. And American companies have invested €1.3 trillion in Europe, employing nearly four million Europeans. But much more can be done to open the US market to our farmers, our workers and our companies. Just eliminating American tariffs could boost European exports to America by 18% in five years, permanently adding some €65bn to the EU economy. An end to transatlantic tariffs would vastly improve the global competitiveness of European firms, as over 40% of our trade is components shipped between the European and US operations of a single firm, doubling and trebling these taxes on trade.

An ambitious and comprehensive TTIP would do far more. Customs procedures would be simplified, generating billions in efficiency gains. European firms would compete on an equal basis in the US’s €1.8 trillion public procurement market. New investment opportunities could be opened. And removing even half the regulatory barriers to trade would add another €200bn to the EU economy. This is particularly important in services, which account for over 75% of the US and EU economies and almost all our net job creation, but which are highly regulated. Indeed, the European Commission’s conservative impact assessment suggests that an ambitious agreement would permanently add €545 to the annual income of every European family.

Small and medium-sized companies (SMEs) in Europe are the primary generators of innovation and new jobs in our economy, and stand to gain the most from a transatlantic trade deal, especially one that takes an ambitious approach to addressing regulatory differences. European SMEs export extensively within the EU’s single market, where they know that the regulations and standards they meet in their home country must be accepted in another EU member state. While many are also successful in the US market, the majority face tremendous hurdles even if they can find a potential customer – they often lack the resources to learn what American requirements are, much less to make costly adaptations to their products. If, over time, European and US regulators can agree that a product or service that can be sold in one market can also be sold in another, this would expand their export markets immensely.

As just one example, a small food manufacturer in Europe can only ship to the United States if US authorities certify that it is safe. If the US could accept the certification of the European regulator, thousands of our SMEs would have a whole new market opened to them. This may be why economic analysis indicates the agricultural sector could be a major beneficiary of such an agreement, which would also help end the US’s continued ban on imports of European beef.

Ambitious regulatory agreements are possible: the US accepts that an Airbus plane certified as safe by the European authorities can be sold to the US, just as it accepts that the European organic food label is as valid as its own. If the US and EU can reach regulatory agreements even in areas like aerospace and agriculture where we have major trade disputes, we can do them in other areas, like motor vehicles and medicines. After all, Americans and European demand high levels of protection for consumers and the environment; while these may differ in some respects, the millions of Europeans that visit the United States each year know they will enjoy food and other products that are as safe as those in the EU. Regulatory cooperation will not lower protections in Europe, but will help bridge unnecessary differences that prevent our firms from reaching their full potential.

The EU needs the opportunities, growth and jobs the Transatlantic Trade and Investment Partnership will generate. There is no time to lose. Trade ministers from the EU’s member states meet on 14 June and must provide an ambitious and open mandate for the negotiations, so our presidents can launch the talks when they gather at the G-8 summit on 17-18 June.

The members of the Business Alliance for TTIP are BusinessEurope, the American Chamber of Commerce to the EU, AmChams in Europe (ACE)European Services Forum (ESF), US Chamber Transatlantic Business Council (TBC), Transatlantic Policy Network (TPN) and UEAPME.